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Scotiabank profit climbs 22%

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Bank of Nova Scotia's (BNS-T) quarterly profit rose nearly 22 percent on higher income from its expansive international operations and a boost to wealth management from the acquisition of asset manager DundeeWealth.

The result, which was slightly ahead of analysts' expectations, pushed the bank's shares up in early trade.

Profit was driven by Scotiabank's international division, which spans about 50 countries, mostly in Latin America and Asia. Scotiabank has made several small international acquisitions since the 2008 financial crisis.

In a statement, Scotiabank chief executive Rick Waugh noted the bank's international footprint leaves it very little exposure to Europe and the United States, where financial institutions are facing economic headwinds.

International banking income rose 27 percent, as stronger commercial lending made up for slim personal loan growth.

Canada's No. 3 lender earned $1.29 billion, or $1.11 a share, in the third quarter ended July 31. That was up from a profit of $1.06 billion, or 98 cents, in the year-before period.

On a cash basis, the bank earned $1.14 a share, slightly ahead of analysts' expectations of a profit of $1.12 a share.

Scotiabank is the fourth Canadian bank to report this quarter. Bank of Montreal (BMO-T) kicked off reporting season with a robust report early last week, but that was followed by disappointing results National Bank of Canada (NA-T) and Royal Bank of Canada (RY-T).

ACQUISITION

Scotiabank said wealth management income rose 16 percent. Canadian banking, its biggest division, climbed 4 percent on loan growth, while income at the bank's capital markets division eased 5 percent.

Barclays Capital analyst John Aiken said capital markets suffered a "weak quarter", but that was not out of line with other banks that have reported this quarter.

But loan-loss provisions on the bank's international commercial loan book were higher than he expected.

"We believe that the incremental provisions taken on its international commercial lending book will garner some attention," he said in a note.

Overall loan-loss provisions eased to $243 million from $276 million.

Canadian banks have enjoyed steadily decreasing loan-loss provisions as the economy recovered from the crisis.

Canadian Imperial Bank of Commerce (CM-T) and Toronto-Dominion Bank (TD-T) will report results over the next two days.

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